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Because they are not able to meet face-to-face, distance education students find it more difficult to develop team-working skills: an important graduate attribute. In an effort to improve the development of this skill, (where possible) teams in a Problem-Based Learning (PBL) course were formed so that students were located in the same city or region. The expectation was that by being close together, the students would be able to communicate with each other more easily, thereby overcoming a barrier to performance. The results of a student survey show that they thought that their team's cohesion and performance were improved by being close together. All those whose team's performance was perceived to be improved wished to have the same opportunity to be close together in the future; many whose team's performance was not improved similarly wanted to work close together in the future. Analysis of the students' grades shows strong statistical significance that those students who were not geographically close to their teammates had lower grades on average. Efforts should be made to form teams relatively close geographically so that the ease of interaction leads to stronger interpersonal bonds, thereby improving the performance levels of the teams.